Article

Make Better Procurement Decisions Through Improved Global Sourcing

How SAP HANA Helps Uncover Data and Put the Right Information in the Right Hands

by Ravindra Kelkar | SAPinsider, Volume 15, Issue 3

July 1, 2014

With its performance improvements and advanced data compression techniques, SAP HANA provides an ideal foundation for a top-notch global sourcing operation to handle its data. Procurement organizations face numerous challenges in dealing with growing data volumes, from visibility to consistency. This article explores how organizations can reduce procurement costs, improve profit margins, and achieve regulatory compliance by implementing a global sourcing solution that helps organizations get the most out of their data.

Global sourcing is an integral business function for procurement organizations, as buyers make strategic decisions regarding the purchase of goods and services based on the availability of low-cost materials and labor.

Procurement organizations face numerous problems in dealing with data, from reporting issues (e.g., a lack of visibility into sales and margin across different business segments) to consistency issues (e.g., failing to account for price inflation in supplier product and transportation costs). Companies looking to reduce procurement costs — and improve profit margins — while achieving regulatory compliance need to implement a global sourcing solution that can help them get the most out of their data and accelerate time to market.

With its performance improvements (up to 10,000 times faster than traditional disk-based systems) and advanced data compression techniques, SAP HANA provides an ideal foundation for a top-notch global sourcing operation. From there, companies that implement a well-integrated, global sourcing solution for their supply chain achieve a number of benefits, from sales and margin performance visibility, to an understanding of how external factors such as demographics or weather affect sales, to customized end-to-end sourcing systems.

Global Sourcing Optimization for Supply Chain Operations

HP’s Global Sourcing Optimizer (GSO) leverages SAP HANA to put robust analytics into the hands of financial controllers, buyers, and other critical business users. It provides insight into how inflation affects sales and margins. Buyers can leverage SAP HANA reporting and analysis tools to make better decisions about where to buy, how much to purchase, and how to negotiate optimized pricing.

Real-time reporting and analysis: By feeding data into the SAP HANA database in near real time, GSO can perform real-time reporting and analysis.

Predictive analysis: Additional predictive information, such as variations in transportation costs and changes in utility and commodity costs, can help you perform predictive analysis based on sales and margin information.1

Real-time sensing and responding: About 1,000 retailers worldwide have outfitted their aisles with sensors to monitor shoppers’ paths. The stores hope that insights from the data will give them an edge over competitors, including online merchants, so they can better stock their products and improve consumer visibility to higher-margin products.

Operation reporting efficiency: Feed data to SAP HANA in real time and drive operational savings through labor efficiency by two to five full-time employees per reporting team.

Incorporated macroeconomic effects on sales: Feed external data like weather and demographic information on top of sales and cost of goods sold (COGS), enabling better decision making and accelerating distribution in specific regions due to near-term effects of external factors.

HP partnered with SAP and an international retailer to create a business intelligence system for the group level, where the group holds the responsibility of the underlying country-based operating codes.

Leveraging the in-memory technology capabilities of SAP HANA and a rapid iterative development approach, the solution gave the retailer extensive global sourcing optimization capabilities in less than eight weeks. The company achieved a 2-3% reduction in procurement costs of certain commodities, leading to higher margins, and improved merchandizing strategies by analyzing sales and margin data to discover trends.

Thrive in a Global Marketplace by Making Faster, Smarter Decisions

To compete and succeed in today’s challenging marketplace, retailers need at their fingertips detailed information and reliable insights into how inflationary costs affect sales and profit margins. With powerful analytics on big data, buyers, financial planners, and business executives can achieve insights that allow them to make faster, smarter decisions on where to buy, how much to buy, and how to negotiate the best possible price.